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Data-Driven Incentive Design in the Medicare Shared Savings Program

https://doi.org/10.2139/ssrn.2808211
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no DOI — not checkedMedicare Shared Savings Program: Accountable Care Organizations. Final rule
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no DOI — not checkedNational Association of ACOs
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no DOI — not checkedThe ACO rules-striking the balance between participation and transformative potential
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no DOI — not checkedHowever, since the existing MSSP benchmarking mechanism lowers the benchmark based on the ACO's savings in the previous year, an ACO might find it optimal to strategically curtail investment (and generate lower savings) in earlier years, in order to receive more favorable benchmarks in later years. In this section, we address the multiple-period setting where the ACO may behave in this strategic manner. We briefly discuss relevant literature and potential approaches to modifying the benchmarking methodology to mitigate the investment distortions that might arise from such strategic behavior. We also present a result that shows that for a forward looking ACO, the deviation in savings from the myopic strategy vanishes over time under the existing benchmarking mechanism. The notion that an agent might find it optimal to strategically delay effort in multi-period incentive problems is well documented in the operations literature. Chen (2000) consider a salesforce compensation contract where agents receive payments based on an annual sales quota system
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